How bank enabled little-known distributor to win the confidence of global brands
Sponsored by Co-operative Bank of Kenya
By Evans Ongwae
Kamakis, a growing residential and commercial area on the Eastern Bypass, is largely famous for its nyama choma (grilled meat). Sizzling steak may be the biggest attraction to this area that has become a top entertainment hub, but there is more to Kamakis.
Patrons who stream to various joints to eat meat and have fun may not know that some of the products they use at home find their way to their local retailers from this very hub. We are talking about well-known global brands.
When you mention Nice & Lovely, a popular skincare and haircare brand sold in the country, consumers will say they know it. This is one of the cosmetics and beauty brands by French company L'Oréal, and it is sold widely in Kenya.
Mention Weetabix, a breakfast cereal, and you’ll find many consumers who know it well and probably use it regularly at home.
Talk of Nestlé, and many people will immediately relate it to the popular beverage products they have enjoyed from the label – including Nescafe, Milo, and the popular infant nutrition formula Nan, among others.
Kiwi, a shoe polish brand, is yet another widely used shoe polish in Kenya. Mention Glade, a home fragrance, and consumers are likely to tell you they are familiar with it. The same applies to Baygon – the insecticide. All the above three are SC Johnson products.
Many regular patrons at Kamakis may be surprised to know that all these famous products mentioned above, among several others, are distributed from Mitikenda, a fast-growing centre on the Eastern Bypass, midway between Ruai and Thika Road, within the wider Kamakis neighbourhood.
Mitikenda is where Vibs Enterprises, the distributor of these products, operates from. And so, there’s more to Kamakis than tantalising plates of Nyama Choma.
When the Managing Director of Vibs Enterprises, Mr Peter Kabatha, speaks, you realise here’s a Kenyan business success story.
He narrates: “We started as a very small enterprise in 2012 in Roysambu. It was a small space, and then two years down the line, we created this place where we started with the ground floor, and then we have gone all the way up to third floor.”
In just two years, Vibs moved from Roysambu to Kamakis on own three-storey premises.
The company, a distributorship, supplies diverse household and personal care products in Nairobi, Eastern, and the entire Mount Kenya region.
“We are distributors of some of the biggest brands,” says Mr Kabatha. “The first one is L’Oreal East Africa, the owners of Nice & Lovely. Then second came Nestlé Kenya Limited, and then on and on, until we now have our 16th principal. And our latest brand is our own tissue called Sasa.”
But, Mr Kabatha points out, the growth was both a blessing and a challenge. He explains: “The first challenge with this kind of business is credit. As you grow, and as you try to get more customers, you land the biggest retailers in the country. What they demand from you is credit. It means that without a place to get some finances, the business will be tough.”
With that in mind, Vibs sought to find dependable financial partners. At the beginning, because of its small size then, the hardest thing was to get a partner who could trust them, says Mr Kabatha, pointing out: “You are small. You don't have anything that you can present to get proper financing.”
The Vibs Enterprises Managing Director says Kenyans often fear getting into such a business because fast-moving consumer goods are not easy to store, and not easy to distribute. But even knowing that, he still went ahead to start what he considers a high-risk business. Why?
He explains that where he previously worked, he encountered big customers, and he told himself he would one day want to serve people like them.
Mr Kabatha recalls: “When the opportunity came, I grabbed it with both hands and I said, well, let me measure myself and see whether I'm equal to it. And true to that, we've tested ourselves over the years and we can say we have overcome all the challenges that come with distribution.”
The business required trucks for distribution, but, as Mr Kabatha points out, “it’s hard to buy them cash.”
He adds: “So, you require a partner who will be able to finance you. You definitely need some financial muscle from somewhere. That's how we have acquired our fleet.”
Having vehicles to transport products is not enough for this kind of business. “Since inception, the first thing that our principles required was a bank guarantee,” Mr Kabatha explains.
Because of this need, “we approached our first partner, Co-operative Bank, who came along to provide bank guarantees,” Kabatha narrates.
Financing from the bank also came in handy when Vibs decided to buy land at Kamakis and build a facility there.
Many of the firm’s trucks have been financed by Co-operative Bank, “because,” Mr Kabatha explains, “without reliable trucks you cannot get to the market.”
The financing by Co-operative Bank has been critical to his company’s success.
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